Dereck Njani

Lesson 4

World History and Financial Evolution:

The Industrial Revolution changed lives and education systems focus on job creation rather than
financial literacy, and the challenges of sustaining a dream life on a single income source.

• “Your salary increases over time, but so does your living cost, making it difficult to
achieve financial independence.”
• Discussed the rat race: most people work their whole lives only to retire broke and we
covered this in the previous lessons
• Emphasized the difference between assets (income-generating) and liabilities (expense-
generating) and how the wealthy prioritize building assets.
• Discussed factors preventing people from starting businesses and the importance of strong
goals to overcome them.
• These risks are : -MONEY
-TIME
- KNOWLEDGE
- RISK

Mindset Matters Most:

• Success begins with the right mindset. Overcoming fear, redefining risk, and shifting
paradigms are foundational steps toward achieving financial and entrepreneurial freedom.
• The idea that "you are one decision away from becoming a millionaire" underscores the
importance of decisive action and long-term thinking.
• Employees and self-employed individuals work for money, while business owners and
investors make money work for them.
• Paradigm shifts require purpose, perception, logic, willpower, and imagination.
• Life’s trajectory depends on the decisions we make.
- Current status: A result of past decisions.
- Future potential: Defined by decisions made today.
Active Income vs. Passive Income:
• Relying solely on active income (salary or freelancing) leads to burnout and limited growth
potential. Building passive income streams through scalable systems (like digital
franchising) is essential for long-term financial independence.
• Active income is not sustainable for financial freedom.
• Building a systematic business model and leveraging digital tools is critical for scalability
and reduced stress.
• Embracing e-commerce and digital franchising opens doors to passive income.

Key Takeaways from Mr. Nuwan Hettiarachchi Journey

1. Decision-Making is Key:
• “You are just one decision away from becoming a millionaire.”
• Life’s trajectory depends on the decisions we make.
• Current status: A result of past decisions.
• Future potential: Defined by decisions made today.
2. Transition Across Quadrants:
• The journey started as an employee, followed by roles in freelancing, lecturing, and
social media management. Each step revealed limitations of active income:
• Freelancing:
• High earnings ($10,000/month), but stressful deadlines, client
disputes, and lack of personal time.
• Lecturing:
• Knowledge exchange was fulfilling but highly time-intensive with no
scalability.
• Social Media Management:
• A well-paying role but came with constant blame during low sales and
high stress.
3. Realizations and Turning Points:
• Active income models led to burnout and health issues (alopecia due to stress).
• The decision to pursue e-commerce and passive income models was driven by a
desire for freedom and lower stress.
• “Stress comes when you exchange time for money without control over your own
work.”
4. Transitioning from E to S Quadrant
• The decision to leave the safety of employment was inspired by a desire for independence
and financial freedom.
• Early ventures in the S quadrant revolved around personal expertise:
• Engineering knowledge led to developing the world’s slimmest power bank,
branded as NW (Noir).
 • Achieved global sales success but faced the harsh reality of being the sole
contributor, performing roles from design to customer service.
“S quadrant income is directly tied to the time and skills you invest. It’s active, exhausting, and not
sustainable long-term.”

5. The Cost of Pursuing Entrepreneurship

• Working 18-hour days without support led to health deterioration, including asthma
exacerbation.
• Reflection prompted the realization: “If you’re dead, you’re out of business.”
• “Before building a business, ensure your health remains intact. Nothing is more important
than life.”

6. Lessons from Failures

• Active income (E and S quadrants) requires continuous effort, making it unsustainable for
long-term financial freedom.
• Despite financial gains, these ventures lacked the scalability and automation needed to move
into the B quadrant.
“In the E and S quadrants, income is proportional to time and skills. To achieve freedom, transition
to systems and investments.”

7. Moving Towards B and I Quadrants

• Kiyosaki’s teaching emphasizes systems in the B quadrant and money working in the I
quadrant.
• The realization: To escape active income, focus on building systems and investments rather
than being trapped in hands-on roles.
This journey underscores the challenges of entrepreneurship and the importance of health,
resilience, and long-term planning. To succeed, one must:
• Build systems that work independently.
• Transition from active income to passive income.
• Prioritize health while chasing wealth.
“The rich get systems to work for them and money to grow for them. That is the ultimate goal of
true financial freedom.”
DIGITAL FRANCHISING

Digital Franchising?
• A business model combining the scalability of traditional franchising with the global reach
of digital platforms.
The Formula for Success:
• Decision → System → Income Formula
• Focuses on leverage, duplication, and scalability to build wealth without continuous effort

Why Shift to Digital Franchising?

• Reduces reliance on active income.
• Provides flexibility and opportunities to build global businesses.
“A simple decision can change the direction of your life.”
“Active income is trading time for money, while passive income gives you the freedom to design
your life.”

Characteristics of digital franchising:

• Low Risk: Minimal financial entry barrier.
• Leverage: Maximize returns with fewer resources.
• Compounding Income: Earnings grow exponentially over time.
• Open Commerce: Accessible from anywhere globally.
• "If you can’t afford to build or buy a system, just find one to partner with."
Steps to Success in Digital Franchising
• Understand the four criteria for success:
1. Low risk.
2. Ability to leverage income.
3. Compounding income potential.
4. Open commerce accessibility.
• Build a matching income (passive) before advancing to higher levels like investment.

Networking and Partnerships: Collaborate with those who have established systems to reduce
risks and fast-track success.
Lesson 5

1. Introduction to Digital Franchising:

Digital franchising is a combination of e-commerce and direct selling. While e-commerce refers to
business operations conducted over the internet, direct selling provides a low-risk business model
with potential for leverage and compounding growth. The idea of digital franchising utilizes the
best of both worlds to offer a promising entrepreneurial opportunity.

2. Direct Selling:
Direct selling is a versatile and inclusive business model where products are sold directly to
consumers through independent sales representatives (also called distributors or direct sellers). Key
features include:
• Flexibility: Sellers set their own hours and goals.
• Inclusivity: No barriers like education, age, race, or financial resources limit participation.
• Variety: Products range from personal care to financial products, creating diverse
opportunities.
The direct selling industry, worth over $180 billion globally with 60 million consultants, is one of
the oldest business concepts. Its origins date back 3,000 years to early trade practices in
civilizations like Egypt, Babylonia, and India. The industry is endorsed by billionaires and has
produced a significant number of financial success stories. However, it is also often misunderstood
by the average person.
3. The Role of Relationships in Business Models:
To succeed in any business, understanding the five types of relationships is crucial:
• B2B (Business to Business): Interaction between businesses.
• B2G (Business to Government): Collaboration between businesses and government
entities.
• B2E (Business to Employee): The employer-employee relationship.
• B2C (Business to Customer): Businesses serving individual consumers.
• C2C (Customer to Customer): Customers recommending or selling directly to other
customers.
Direct selling primarily leverages the C2C model, where word-of-mouth and personal
recommendations drive sales.
4. The C2C Relationship and Its Potential:
C2C relationships are natural and have existed for ages. This model relies on personal experiences
and recommendations. For example:
• Movies: When someone enjoys a film, they recommend it to others, who then watch it.
Despite driving ticket sales, the recommender earns nothing.
• Restaurants: Sharing positive dining experiences encourages others to visit, indirectly
boosting the restaurant’s revenue.

"We do free recommendations daily—movies, meals, products—but earn nothing from

it. Direct selling allows you to monetize these natural behaviors."
5. Direct Selling + E-commerce = Digital Franchising:
Digital franchising combines the global reach of e-commerce with the personal touch of direct
selling. By monetizing the C2C recommendation model, individuals can create multi-million-dollar
businesses. It capitalizes on our tendency to share experiences, turning what is often a passive
action into an income-generating opportunity.

1. Direct Selling’s Legacy: One of the oldest and largest industries, producing more
billionaires than any other business model.
2. C2C Power: Everyday recommendations hold financial potential when strategically
leveraged.
3. Digital Franchising Synergy: Combines e-commerce scalability with the trust-driven
nature of direct selling.
4. Inclusivity: Offers a level playing field for all, with no prerequisites for education or
resources.
5. Empowerment: Empowers individuals to control their time, income, and business growth.

Difference Between Pyramid Schemes and Direct Selling

Direct selling often gets confused with pyramid schemes, which are illegal and unethical. Here's
how they differ:

Feature Direct Selling Pyramid Scheme

Legality Fully legal and regulated by FTC Illegal in most countries
Membership fee with no tangible
Sign-up Fee Payment for a product or service
product
Earnings Model Based on sales of products/services Based on recruiting more people
Unique, branded, and reasonably priced
Product Quality Overpriced or no real products
products
Director Board Transparent and visible Non-existent
Training Provided Regular training to improve skills No training
Tax Compliance Pays taxes, including income taxes No taxes paid
Fully registered and members of
Registration Not registered
WFDSA
Sustainability Companies operate for over 10 years Rarely lasts beyond a year
Comparison to Fake gold—deceptive and without
Genuine and highly valuable
Gold value
1. Consumer-Driven Marketing:
• Direct selling capitalizes on word-of-mouth recommendations, creating value for
consumers and allowing them to earn.
• It aligns with the fact that 92% of consumers trust recommendations from people
they know.
2. Legal Foundation:
• FTC regulations ensure that direct selling operates within legal boundaries,
differentiating it from scams like pyramid schemes.
3. Economic Impact:
• The direct selling industry is larger than several established industries, proving its
potential for creating opportunities and wealth.
4. Misunderstanding vs. Endorsement:
• While average consumers often confuse direct selling with pyramid schemes, billion-
dollar companies endorse and use it as a marketing strategy.
5. Sustainability:
• Direct selling is poised to remain relevant for centuries due to its adaptable and
transparent business model.
Lesson 6

Vision and Mission as the Foundation

• Vision: "Raise Yourself to Help Mankind" (RYTHM) emphasizes personal growth as
a prerequisite for contributing meaningfully to the world. Like the airplane oxygen
mask analogy, you must secure your well-being and capabilities before helping
others.
• Mission: "Touching a Billion Hearts", by improving the lives of a billion people
through impact-driven work. This ties personal success to broader societal
contributions.
2. Understanding Digital Franchising and Direct Selling Models
Digital franchising blends direct selling and e-commerce. It includes two distinct types of
direct selling models:
• Product-Oriented Companies:
• Focus: 80-100% on selling fast-moving, affordable products.
• Model: Frequent buying and selling cycles.
• Startup Cost: Low entry cost but requires recurring purchases.
• Earnings: Smaller commissions but regular income tied to sales performance.
• Target Audience: Large customer base due to affordability and accessibility.
• Business-Oriented Companies:
• Focus: 20% on selling products; 80% on building a global distribution
network.
• Model: Higher-priced, unique products (e.g., $500–$1,000), sold occasionally
with significant commissions.
• Startup Cost: Higher one-time spending (not an "investment").
• Earnings: Potential for high returns from network-building rather than
frequent sales.
• Development: Heavy emphasis on personal and leadership skill development
for long-term success.
3. Key Differences Between Product-Oriented and Business-Oriented Models
• Ease of Entry: Product-oriented companies are easier to start with due to low costs
and simpler sales cycles.
• Earnings: Product-oriented models provide steady but lower income; business-
oriented models are challenging initially but offer higher income potential in the long
run.
• Focus: Product-oriented models rely on consistent sales; business-oriented models
prioritize developing networks and empowering individuals with leadership skills.
4. Philosophy of Business-Oriented Companies
• These companies focus on sustainable growth by enhancing their partners’ abilities,
helping them build leadership and management expertise.
• The strategy moves beyond sales to building a network, aligning with personal
growth and entrepreneurial aspirations.
Important Learnings
• Vision Drives Rewards: Without a clear mission and vision, any business endeavor will
lack purpose and impact, limiting both societal contribution and personal rewards.
• Importance of Personal Development: Continuous self-improvement is crucial for
business-oriented success, especially in leadership-driven models.
• Earning Through Network Building: Business-oriented companies are less about frequent
sales and more about creating scalable distribution networks, which require strategic efforts
and skills.
• Start-Up Challenges vs. Rewards: While product-oriented models offer an easy entry,
business-oriented models demand higher initial effort and investment, which pays off
significantly in the long term.

Reflection
• “Raise yourself to help mankind.” – The foundational principle of growth before
contribution.
• “The more sales you make, the more money you make.” – A straightforward model for
product-oriented companies.
• “When you sell, the commissions, the profits are extremely high.” – The promise of
business-oriented companies for high-value returns.
On Being Product-Oriented:
• Products have a short-term competitive edge. Companies may claim the “#1” position
temporarily, but competition and innovation ensure constant change in rankings.
• “Today’s number one can be tomorrow’s number three or four.”
• Businesses that focus solely on products risk losing relevance, as product superiority is
transient.
Lesson:
Avoid being purely product-oriented in business. Focus on building sustainable networks and
business models that are resilient to product fluctuations.
Balance Between Business and Product Focus:
• While products and services remain vital, the presenter emphasizes an 80-20 rule:
• 80% of focus should be on building the business and network.
• 20% should address products and services.
• Partnerships with top-tier manufacturers ensure quality but don’t drive the core business.
Lesson:
Adopt a network-driven approach for long-term sustainability rather than relying entirely on
product success.
Compensation Plans in Direct Selling: Three primary compensation models were analyzed:
1. Binary Plan
2. Unilevel Plan
3. Breakaway Plan
Binary Plan (Recommended by Presenter):
 • Structure: Two legs (left and right); depth is unlimited but width is capped.
• “Your focus is only on two networks, ensuring streamlined knowledge flow.”
• Advantages:
• Encourages teamwork, as additional recruits (beyond two) are placed under existing
partners, benefiting everyone.
• Focused efforts maximize efficiency and reduce distractions.
• “Even inactive partners later benefit from a growing organization.”
Unilevel Plan:
• Structure: Unlimited width; depth typically capped at 5-8 levels.
• Advantages: Simpler but focuses primarily on individual sales efforts.
• Disadvantages: Commissions decline with depth, and it encourages self-focused sales
targets.
• Often used by product-oriented companies with mandatory monthly sales quotas.
Breakaway Plan (Criticized by Presenter):
• Structure: Similar to Unilevel, but highly competitive.
• Flaws: Partners must outperform those below them or risk losing their downline
permanently.
• “This plan creates unhealthy competition and can result in devastating losses for
individuals.”
• Example shared: A person lost a 200-member organization due to missed sales while
recovering from an accident.
Lesson:
The Binary Plan fosters collaboration and sustainability, making it ideal for network-driven
growth.
Financial Perspective – Earning Through Plans:
• Commissions: Derived from advertising and middleman cost savings.
• “50% of these savings are distributed to the network as commissions.”
• Binary Plan Pay Structure:
• Rewards effort via a points-based system, with earnings tied to network growth and
partner activity.
Lesson:
Focus on leveraging collective growth to maximize earnings while supporting team members.
Philosophy of Network Building:
• Building a network is more sustainable than selling products because it fosters long-term
relationships and residual income.
• “Success in direct selling lies in teamwork and shared benefits, not individual
competition.”
1. Sustainability in Business:
Focus on creating a robust distribution network, not just relying on a product’s temporary
success.
• Example: Binary plans thrive on collaboration rather than isolated efforts.
2. Teamwork > Competition:
Models like the Binary Plan emphasize mutual growth, creating benefits for both the
introducer and the team.
3. Adaptability in Business Strategy:
Understand that no product or company will remain on top indefinitely. Adapt and
innovate to stay relevant.
4. Choose Your Compensation Model Wisely:
Binary plans often outperform others due to their emphasis on focused efforts and mutual
support, as opposed to aggressive competition seen in breakaway plans.

"A sustainable business is built on people and networks, not just products."